2006 (2) TMI 145 - HC - Income Tax

Summary

Issues:
Challenging order declining interest under section 244A(2) of the Income-tax Act. Delay in filing returns. Condonation of delay. Entitlement to interest.

Analysis:

The petitioner challenged the order declining interest under section 244A(2) of the Income-tax Act issued by the Chief Commissioner of Income-tax. The petitioner had remitted advance tax for the years 1988-89, 1989-90, and 1990-91, but filed returns declaring loss with substantial delay. The returns were not acted upon by the Assessing Officer due to the delay. The petitioner applied for condonation of delay, which was initially rejected but later reconsidered and condoned. The assessment was completed, leading to a refund and interest granted under section 244A(1) of the Act. The petitioner sought additional interest under section 244A(2) of the Act, which was declined by the Chief Commissioner. The court considered the reasons for declining interest and found that the delay in completion of proceedings leading to the refund was attributable to the petitioner due to delayed filing of returns.

The court noted that the delay in filing returns ranged from three to five years, and the delay was condoned by the Commissioner of Income-tax. The assessment was completed promptly after the condonation of delay, indicating no delay on the part of the Assessing Officer in processing the returns and granting the refund. The petitioner would have been entitled to interest under section 244A(1) of the Act if the delay in completion of assessment proceedings leading to the refund was not attributable to the petitioner. Since the delay was due to the delayed filing of returns by the petitioner, interest under section 244A(2) of the Act for the period of delay in filing the returns was deemed appropriate.

The court considered the delay in disposal of the application for condonation of delay and found that the delay in reconsideration of the application was not attributable to the Department. The petitioner's contention that the delay in disposal of the application should be included for the purpose of interest was rejected. The court emphasized that the delay in action on the application for reconsideration was not due to negligence by the Commissioner of Income-tax. The petitioner's delay in approaching the court for direction on the matter further supported the view that the delay was attributable to the petitioner. As the delay from filing returns to the condonation of delay was attributable to the petitioner, the court upheld the decision to decline additional interest under section 244A(2) of the Act. The petition was dismissed, and no costs were awarded.